Daily Currency Update

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The Greenback strengthens amid global equity weakening and a plunge in crude oil.

USD - United States Dollar

The U.S. dollar trades 0.51, 0.1, 0.50, and 0.2 percent higher versus the Loonie, Euro, Pound, and Yen respectively, compared with Friday’s close. However, it is falling against the Kiwi and Aussie dollar by 0.52 and 0.16 percent. It seems as though the market has become overly optimistic recently, especially given the high uncertainty, lack of current economic activity, and negative economic outlook. Lock downs seem to be working, but infections are still much higher these days compared with when countries decided to shut down. For now, it appears that a cure is the only hope to restore the pre-virus levels of economic activity. The market continues to play headlines in the short-term and volatility is still elevated.

The next scheduled Fed meeting is on April 28th and 29th. For now, the U.S. dollar is strong, as crude oil saw its biggest one-day drop in 4 decades and global equity has weakened as market participants are worried about likely sluggish corporate earnings.

Key Movers

In Europe, Merkel advised against moving too quickly to ease the lock down. The EUR/USD pair trades flat at 1.0880, which is the same as last Friday’s close.

The Brexit proxy EUR/GBP, which is trading at 0.8746 at this moment, appears to be distorted, considering the recent pandemic and the Brexit headlines taking the backseat for now. It appears that the most likely outcome surrounding the proposed Brexit trade deal date with the E.U. will be postponed, delaying the downside risk to the GBP. On the back of this, we may see more favourable terms given to the U.K. as there is more time to negotiate. Additionally, if the coronavirus fallout worsens, it is likely that the E.U. will not be in a position of power to delay negotiations further at the expense of an already fragile economy.

Expected Ranges

USD/CAD: 1.4019 - 1.4106 ▲

EUR/USD: 1.0827 - 1.0943 ▼

GBP/USD: 1.2407 - 1.2534 ▼

AUD/USD: 0.6358 - 0.6445 ▲

NZD/USD: 0.6050 - 0.6131 ▲

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